Combating Counterfeits

The pharma industry is working toward establishing the ideal anticounterfeiting system, combining authentication tools and track-and-trace capabilities to serialize at the unit level, for every drug.

By Marie Redding
Freelance Writer

It’s increasingly difficult—even for the experts—to tell the difference between a counterfeit drug and the real thing. Consumers feel they have no sure way of knowing if they’re getting duped. They may even ingest a harmful ingredient a counterfeiter has used to make a fake pill—like highway paint, floor wax, and boric acid—according to a CBS news report.

An episode of “60 Minutes” that aired on CBS Networks last March featured the head of Pfizer’s global security team, John Clark, leading police to a counterfeiting operation in a back ally in Lima, Peru, where thousands of drugs were confiscated. Both Clark and CNN’s chief medical correspondent Dr. Sanjay Gupta said they couldn’t even tell by just looking at some of the fakes that they weren’t legit. They pointed out some of the spot-on details the counterfeiters replicated on both the pills and packaging.

“That ‘60 Minutes’ episode had a resounding impact in the industry,” says Lee Brown, business development manager, Omega Design (Exton, PA). “As a result, the pharma industry has an elevated concern about counterfeiting. Packagers are concerned with securing their own supply chains and meeting California legislation to protect prescription products down to the unit level,” Brown says.

The Global Crisis
When authentic drugs are diverted to other countries, counterfeits can more easily sneak into the supply chain —but serialization offers a solution. A track-and-trace system could help verify drugs all along the extensive supply chain, and it could help customers ensure that a drug is authentic. It could also make it more difficult for a product to be diverted.

“A diverter will order extra product, remove any visible marks, and off-sell the rest in another country to make money,” explains Keith Cutri, director of business development, Kodak Security Solutions. “Outside of the normal distribution system, counterfeits can be introduced into the supply chain by mixing with real drugs. They can look the same, and be packaged the same,” Cutri says.

Cutri points out that diversion is a huge issue in Africa, especially with Malaria and HIV drugs. Over 50% of the drugs purchased in Africa are counterfeit, according to The World Health Organization.

“Drugs are repackaged and could be outdated. People are dying because they’re not getting the right drug or the right dose—it’s a serious challenge for drug companies right now,” says Cutri. And he should understand the scope of the issue—Cutri is a former FBI agent and has directed many black market and gray market investigations.
The Track-and-Trace Solution
A March 2011 report, submitted to U.S. Vice President Joseph Biden and Congress, recognized the counterfeit issue as a full-blown global health crisis that’s only getting worse. One recent example involved two cancer drugs, trademarked by a U.S. company, which were illegally manufactured in China and Indonesia—and missing the critical active ingredient.

The proposed solution, according to the report, is a track-and-trace system. It says: “Effective track-and-trace systems make it more difficult to introduce counterfeit drugs into the U.S. market, make it easier to identify those responsible for making a product unsafe, and facilitate the recall of unsafe products by more quickly identifying where a product is located.” The administration recommended that Congress adopt a track-and-trace system for pharmaceuticals and all related products.

The report was submitted by The Counterfeit Pharmaceutical Inter-Agency Working Group, which consists of representatives of several agencies including the Office of the Intellectual Property Enforcement Coordinator (IPEC) and FDA.

California has a 2015 deadline for legislation, which includes item-level serialization. Similar legislation has already passed in other countries. The report was good news for many in the industry who say it has brought the U.S. closer to adopting a national standard for serialization.

Serialization typically involves numbers being randomly generated and then digitally printed and/or incorporated into bar codes or RFID. The serialization number could be used to verify the product at several points throughout the supply chain and distribution channels, tracing the path of a drug from manufacturer to patient. Every time a bar code or RFID were to be scanned, information about that product could go into a database, which could then become its electronic pedigree.

“At least 50% of pharmaceutical manufacturers will have one or more product lines serialized down to the item level by the end of this year,” predicted Eric Newmark and Alan S. Louie, Ph.D., authors of the IDC Health Insights Report “U.S. Life Science 2011 Top 10 Predictions,” which was published in January.

The IDC Health Insights report also states “The industry has had no true knowledge of the route a product travels from manufacturing to the consumer”—a frightening thought.

Challenges of Serializing
The same IDC Health Insights report also states that the industry is nowhere near ready yet to comply with upcoming regulations, but forward-looking companies are pushing ahead with serialization.

Drug companies can also pursue product authentication technologies such as taggants, holograms, inks and dyes, watermarks, and others. These technologies typically involve some sort of proprietary identification system that may or may not tie in with a standardized approach to serialization.

The fact that there isn’t just one direct path to drug verification makes the process of implementing a system a huge challenge.
“Setting up a serialization system is not like ‘plug-and-play,’” says Jack Henderson, sales director, pharmaceuticals, SICPA (Springfield, VA). “It’s a very complex undertaking that’s not easy because there are many solutions to choose from, with many disciplines involved that all need to be engaged,” he explains.

“There is an ISO standard for verifying the code, and GS1 is the common syntax—but even within those parameters, there is a huge amount of variability,” he explains.

Henderson says it takes a collaborative effort to conquer a serialization system.

“Pharma companies bring us their perspective on what they want to achieve. We assess the situation, and help them bridge the gaps by offering advice on how they can get to where they want to be, by suggesting which platforms would be best,” he explains.

Deciding which type of authentication technology to use has many factors to consider.

“A consumer can look on a package for things like a hologram, and it may be perceived as a sign of authenticity,” says McFall.

“But some markings really don’t have much value because they’re so easy to replicate,” he adds.

According to Kodak’s Cutri, a major challenge is to think strategically about how to apply various tracking codes to packages, labels, and closures—or they will be useless.

“If diverters can get to those codes and modify or remove them, then the pharma companies have just spent millions of dollars to implement a track-and-trace system that will just [make] things worse,” says Cutri.

Henderson says it’s more about the whole process rather than a specific technology. “Technology is not really the problem—the technology is there. The hard part is to evaluate your situation and make sure you are choosing the right path,” he cautions.
Added Benefits
The many benefits of serialization—which only some pharma manufacturers are acknowledging, according to the IDC Health Insights report mentioned above, include: channel optimization, inventory reduction, increased perfect order performance, better forecasting and production planning, streamlined recalls, improved analytics, reduced revenue leakage, and better preservation of brand equity.

Many pharma companies are most concerned with the high cost of serialization, however, rather than pay attention to the benefits, suppliers say. SIPCA’s Henderson says it’s critical for pharma manufacturers to look at the big picture and to understand there is so much more to serialization than just adding codes to meet regulations.

“There are some companies who will just do the bare minimum for compliance, but they’ll still have to invest in the machinery, so they should take a look at the many business benefits that could be gained,” Henderson explains. He advises companies to evaluate what they’re currently doing, compared to what regulation will require—and then do an assessment to determine the most efficient manner to proceed.

Experts say that many of the benefits of serialization systems will be realized in the long-term. “It’s difficult to see the tremendous business value a serialization system is likely to have, but once you start to use these new systems to look for problems in your supply chain, you’ll find them,” says Henderson. “Once pharma companies take a closer look at how products are distributed, many more benefits of serialization will be realized,” he adds.

Henderson also points out the valuable business intelligence that can be gained through serialization. “Besides diversion, serialization can help address quality issues, reducing charge-backs and the number of returned products. It can also be used as a marketing tool—and gaining the consumer’s trust in your brand is extremely valuable,” he says.

Hurry Up and Serialize, Suppliers Advise
Many suppliers are urging pharma manufacturers to make the move to serialization a priority. Serializing may require altering machinery or buying new equipment—and California’s deadline is looming. The concern among suppliers is that there are a lot of pharma companies that need to implement these systems, so they need to act now.

“Pick a proven technology supplier right away,” says Domino’s Stobie, advising pharma companies to forge ahead. “A lot of the good suppliers will reach a saturation point by 2012—to the point where they can’t take on anymore business, so lay out your strategy soon,” he warns.

Suppliers say that some pharma companies are already taking on the challenge of serialization—but others aren’t ready.
Ernie Chaplin, vice president of marketing at Clondalkin Pharma & Healthcare (Greensboro, NC), says: “I think the move will continue to be slow, throughout the next 2 1/2 years—but more companies will soon begin to implement pilot programs.”

Stobie feels that it will take closer to 3 to 5 years for the entire industry to get on board with serialization, even though others are predicting 18 months. He predicts by 2020 we’ll see serialization at the primary and secondary packaging levels in the United States, but for the next 10 years, the issue’s many complexities will continue to be confusing for everyone involved.

Labeling Systems’s customers are taking things one step at a time. “Our customers want systems that are track-and-trace ready, but that’s it for now. They’re not ready for the extra expense yet—but they are making sure their systems are ready for future expansion,” says Erik Bronander, vice president of sales and marketing.

Part of the issue for some companies is the different legislation that exists in different countries—so, which do you follow?

“Many companies want to implement one extensive global system, because the cost of infrastructure would be less,” says Kodak’s Cutri.

Henderson points out that global efforts toward harmonizing standards, such as using a GS1 or similar coding structure, are helping the industry realize the vehicle that will be used—and this is a helpful step in the right direction. “Pharma companies are now deciding how to coordinate their plans in the regions that require coding,” he adds.

Some suppliers say customers are waiting to implement new systems until new legislation leaves them no choice.
“Legislation that would provide a mandate would help to force the issue. Our customers work well when it means complying with a law...but when the legislation isn’t there, the effort lacks,” says Nosco’s McFall.

Henderson agrees. “Companies are not going to decide on their own to make changes—they will wait for a mandate, due to the work involved. But, it’s likely we’ll see more regulations in other parts of the world before there’s an FDA requirement.”

“All the major pharma companies have initiatives underway, because they are already affected by global regulations, so they’re already in the planning stages—at the minimum,” says Stein. “Every company I know is in process, because they realize the complexity of the task, and that it can’t be done overnight,” he adds.

Bronander of Labeling Systems shares a similar view. “Everyone is already gearing up for the markets they sell in, and they’re getting ready with the proper equipment. They are all working toward the California standard, hoping it’s adopted by other states and by the federal government so they won’t have to change everything around again,” he says.

Although a lot of pharma companies are playing the waiting game, Omega’s Brown says he’s getting the sense that a mild panic is beginning to brew: “2015 is the e-pedigree deadline for California, and there hasn’t been any sign that the deadline will change. With the task ahead for so many packaging lines, that’s not a lot of time,” he says.

“There’s more genuine interest now, and we are getting a lot more inquiries—but the biggest portion of the work is yet to be done. If pharma companies don’t get in line for serialization, the train is going to leave the platform, and they’ll be left on the station,” cautions Brown.
The Bottom Line
Suppliers say that serialization is changing the game – drastically—for their business.

“As packaging machinery suppliers, we’re working on a different level now, and different strategies are in play,” says Omega’s Brown. “Our customers are thinking about the product beyond the loading docks and into the supply chain. There’s a necessary collaboration among packaging departments, IT departments, supply chain groups, and brand managers,” he continues.

Stobie agrees, pointing out the huge impact serialization is having on the entire industry. “It affects packagers, IT partners—everyone. It changes the playing field significantly,” he says.

Brown says there’s a new need for suppliers to understand all the facets of the pharma industry. “Everything starts with us, at the packaging line—then the product goes out into the world through the supply chain,” he says.

Choose an experienced partner, and take things one step at a time, suppliers are chanting.

“Not everyone realizes that there are literally only a handful of suppliers who can do this properly,” says Stobie. “Make sure your partner has done the work before—that’s key,” he says.

Labeling Systems’ Bronander agrees. “There are very few experts in this field. Other companies are just getting started, while we’ve been working with these systems already. But we’re all in the same boat—all learning together.”

Making sure your system can be upgraded in the future is another smart move.

Stobie advises: “It’s easier if you don’t try to do everything all at once. Do the minimum first, but make sure you can make changes to your system later—think about the long-term when choosing equipment.”

Stobie warns, “You’ll end up in trouble if you partner with a company that doesn’t know what they’re doing. Since serialization isn’t easy, an integration expert is important.”

He adds, “The best advice I can give is to get a good partner. And get one very soon.”